Cannex: Income Annuity Shoppers Are Asking for Lower Premiums

What You Need to Know

The amount of annual income requested increased 2.9%.
Cannex sent shoppers a lot more quotes.
QLAC activity climbed.

U.S. life insurers may be attracting more income annuity shoppers with small nest eggs.

Shoppers looking for single-premium immediate income annuities in the third quarter searched for contracts with an average premium of $313,599, down 16% from the average for the third quarter of 2022, according to new data from Cannex Financial Exchanges.

Shoppers seeking single-premium deferred income annuities solved for an average premium of $221,746, down 26% from the average for the year-earlier quarter.

The average premium “solves” dropped as activity increased: The number of quotes provided jumped to 391,562, from 213,633. Between the second quarter of 2022 and the second quarter of 2023, quote volume increased to 256,336, from 171,162.

What it means: Life insurers’ efforts to persuade sponsors of 401(k) retirement plans to add annuitization options may be pulling more retirees with relatively small asset totals into the income annuity market.

Income annuities: Life insurers have designed multi-year guaranteed annuities, non-variable indexed annuities, registered index-linked annuities and other types of annuities to help clients accumulate assets.

Income annuities are contracts designed to help clients turn large sums of cash into streams of income.

An immediate annuity is an income annuity with benefits payments set to start within 13 months of the purchase date.

The issuer of deferred income annuity promises to begin paying benefits 13 or more months after the purchase date.

Immediate annuities: The average age of the clients shopping for immediate annuities through the Cannex system fell slightly, to 68.3 in the latest quarter, from 68.4 in the year-earlier quarter.